SABRE Cuts June 2022 Commentary by Dr. Reid Cummings
Posted on June 28, 2022 by Dr. Reid Cummings
Greetings and welcome to the June 2022 edition of SABRE Cuts.
The aging of the real estate profession is a troubling trend for an industry that has experienced exponential growth in recent years, but which now faces substantial headwinds in the face of rising interest rates, the most persistently high inflation since the 1970s, and increasing direct competition from blockchain and other digital platforms. While many company owners, executives, and brokers have focused recently on making as much hay as possible, few have considered two lurking industry questions: who is recruiting and training the next generation of real estate professionals, and how are they entering the business?
A reasonable question might be why is this even important? The answer is that real estate is a critically important component of the global economy, overshadowing the combined worth of worldwide equity and debt instruments. Indeed, a recent report pegged the value of global real estate assets at $326.5 trillion, nearly four times global gross domestic product.[i] Another release estimated that the business of real estate鈥攂rokerage, leasing, and management鈥攊ncredibly, would grow to $3.7 trillion in 2022.[ii]
In the United States, real estate is just as important. Market growth has soared since the early days of the Covid-19 pandemic, pushing industry employment to 2.36 million in May 2022. In 2021, U.S. real estate business amounted to $2.42 trillion, accounting for 10.07% of national gross domestic product.[iii] In contrast, even in the high-flying days prior to the 2008-2009 housing market meltdown and financial crisis, real estate contributed only 8.09% to the national economy.[iv]
Nevertheless, while real estate as an asset class and an active industry continues to play an increasingly crucial role in the nation鈥檚 economy, data suggest that industry participants may be doing a poor job of recruiting the next generation of real estate professionals. According to the National Association of Realtors庐, the median age of its 1.56 million members is 52, which is a significant number considering NAR鈥檚 members account for nearly 67% of all industry employment.[v] By comparison, examining the median ages of only a handful of other industries illustrates significant age gaps compared to real estate workers. Consider that the U.S. Bureau of Labor Statistics reports a median age of 48 for all people working in real estate and rental and leasing, higher than those working in finance and insurance (44), construction (42), data hosting (41), and software development (39).[vi]
Understandably, this is concerning for many real estate company owners. In the last couple of years, I have spoken with owners or managing brokers of multiple real estate companies in Alabama, Florida, Georgia, Mississippi, and Louisiana to find out what they were doing about this worsening problem. My sense is they know they need more effective efforts to recruit the next generation of real estate professionals, yet there was no consensus on how to do so. Although many firms employ strategic marketing campaigns designed to attract new industry participants, surprisingly, few have a plan for targeting college students.
I founded the Jaguar Realty Internship program in the Mitchell College of Business to tackle the problem head-on by building a bridge from education to practice for the next generation of real estate professionals. The Jaguar Realty Internship is unique in two distinct, symbiotic ways. First, undergraduate student are educated in real estate, having completed many if not all required real estate courses before beginning their internships. Second, as fully licensed salespersons, students practice real estate by working in a professional real estate firm, where they receive training and mentoring from some of the best in the business.
The Jaguar Realty Internship is open to any student majoring or minoring in real estate. After completing the required pre-license education taught in the college and passing the Alabama salespersons license test, students are then placed as paid interns working for participating area real estate companies. Students complete their post-license education requirements, perform various office tasks, attend company meetings and training programs, participate in professional association events, and work alongside assigned coaches and mentors. When the internship is over, students rely on the insights and perspectives gained from on-the-job training to guide their future real estate career decisions, and many will choose to remain with their firms as full-time agents.
Although still in its infancy, the Jaguar Realty Internship program is already making a difference. I asked some internship graduates a few questions about their experiences, and I think our readers will agree their comments speak volumes!
What is the most important thing you learned from the Jaguar Realty Internship?
鈥淭he Jaguar Realty Internship gave me a realistic idea of what the 鈥榬eal鈥� world entails. It helped me gain contacts that I would not have had. It really gave me a sense of who I am outside of school.鈥�
鈥淭he most important thing that I learned from the Jaguar Realty Internship program was to never look at your clients or customers as money signs. I learned from my professional colleagues that you need to always have a mindset that is more geared towards helping people than what money you are getting from your clients.鈥�
What was it like to work in a fast moving, sales driven professional environment?
鈥淚t was intense, and at first intimidating. But I would say that it is important to gain as much insight from the professionals that are around you as you can. It taught me how cut-throat and driven one must be in this field of work, and how much time outside of the office goes into being successful.鈥�
鈥淲orking in a fast-paced, sales driven professional environment was really interesting to me. I never realized what goes on and how many details are involved in the real estate industry. I am so thankful that I have seen and experienced first-hand what it is like to be in the middle of the real estate world.鈥�
How did your Jaguar Realty Internship experience help you determine a possible career path?
鈥淚 feel that programs like this not only teach you what you want, but also what you don鈥檛 want, which is just as important. Learning who you are outside of a classroom setting is so important and I would encourage everyone to do it. The Jaguar Realty Internship taught me that even if I don鈥檛 want to be in sales, there are many other real estate career opportunities, you just have to ask to learn more.鈥�
鈥淭he Jaguar Realty Internship helped me determine a possible career path by showing me what it is like to be an agent. When you are an intern in this program you are an agent, and you are treated as one as well. I decided to keep being a real estate agent after my internship, and I hope I can keep being a real estate agent for as long as I can.鈥�
What would you tell other students to expect from the Jaguar Realty Internship?
鈥淵ou need to be focused because there isn鈥檛 someone there pushing you like a professor you might be used to. You will get as much out of the program as you put in, so try your best to take advantage of all the opportunities. Just be true to yourself and take any opportunity given!鈥�
鈥淔or students interested in the Jaguar Realty Internship, I would simply tell them to just try it! You will be placed in a real sales environment where you are treated just as any other agent is treated. There are so many professionals who are eager to help you succeed and guide you through everything that you need to know in the field of real estate. It is such a unique opportunity that South has to offer, and I promise that you will not regret taking advantage of the opportunity!鈥�
I want to thank Daniel Dennis, Teresa Williamson, and the whole team at Roberts Brothers for working with me to develop the framework for the Jaguar Realty Internship. This Fall, I hope to engage other area real estate companies who see the program鈥檚 value and who are just as excited as I am about the possibilities for expanding the program. My hope is that together, we can work to develop our region鈥檚 next generation of real estate professionals.
Until next time, from everyone at SABRE, we wish you and yours all the best.
[i] Tostevin, P. Value of global real estate rises 5% to $326.5 trillion. Savills News, September 21, 2021. Retrieved on June 8, 2022, from: https://www.savills.com/insight-and-opinion/savills-news/319145/value-of-global-real-estate-rises-5--to-$326.5-trillion.
[ii] The Business Research Company. Real Estate Global Market Report 2022 by Type, Mode, Property Type (2022). The Business Research Company, February 2022, retrieved on June 10, 2022, from: https://www.researchandmarkets.com/reports/5546258/real-estate-global-market-report-2022-by-type?utm_source=CI&utm_medium=PressRelease&utm_code=rh9mbf&utm_campaign=1669871+-+Real+Estate+Global+Market+Report+2022&utm_exec=jamu273prd.
[iii] U.S. Bureau of Labor Statistics. Real estate and rental and leasing: NAICS 53, U.S. Bureau of Labor Statistics, 2022, retrieved on June 12, 2022, at: https://www.bls.gov/iag/tgs/iag53.htm.
[iv] Amadeo, K. Real estate鈥檚 impact on the U.S. economy, The Balance, March 4, 2021. Retrieved on June 12, 2022, from: https://www.thebalance.com/how-does-real-estate-affect-the-u-s-economy-3306018#:~:text=In%202018%2C%20real%20estate%20construction,2006%20peak%20of%20%241.19%20trillion.
[v] National Association of Realtors庐. Monthly membership report, National Association of Realtors庐, May 2022, retrieved on June 12, 2022, from: https://cdn.nar.realtor/sites/default/files/documents/monthly-membership-05-2022.pdf.
[vi] U.S. Bureau of Labor Statistics. Labor force statistics from the current population survey, U.S. Bureau of Labor Statistics, 2022, retrieved on June 12, 2022, at: https://www.bls.gov/cps/cpsaat18b.htm.